Q: was today the “panic” selloff in gold?
J: Absolutely. Don’t know how much longer it will go but I definitely believe that being greedy is the right response to the obvious fear in the PMs markets right now.
Q: A few quick questions on the model ETF portfolio:
1) Can you give some background on why you’re including BND, LQD, and TLT in the bond section? I know BND has corporate, treasuries, mortgage backed, which obviously overlaps with TLT and LQD. Can you provide some perspective on how you picked these 3 (was BND the only good way to get mortgage backed and lower maturity treasuries in an ETF)?
2) Are you still updating the ETF section? I haven’t seen any notes on this in the charts, etc., recently, so wasn’t sure where all of this stood.
3) Are all buy sell decisions still based on the trend strategy (10 SMA and ROC)? It seems like you might have made some general fundamental decisions there as well?
1) BND has an average maturity around 5 versus 20+ for TLT. LQD is also around 5 but adds a bit more of an equity component. I like using all three because they add more non-correlated asset classes to the overall portfolio.
2) I am. There just hasn’t been anything to do with it lately.
3) No. Trend is a large part of it but I also want to incorporate some of the other research we’re doing. Ultimately, we will only have a full or overweight position in the tactical portfolio when the trend is positive.
Q: 20+ years ago companies wrote off goodwill/intangibles on a yearly basis.
Stocks were trading at 10-15X EPS after those expenses were taken.
Now companies do not write off goodwill/intangibles (unless there is an impairement).
So that might make stocks even more expensive when you are using an “apples to apples” comparison.
J: Interesting. I’m no history buff when it comes to accounting rules. I do find it fascinating how many people are relying on non-GAAP earnings numbers today while they seem like they could be at the widest gap to GAAP numbers in history.
Q: Hi Jesse
Enjoyed your weekly report.
I want to ask your opinion of the recent report from Ryan Detrick showing the 8 week moving average of AAII bulls have only been this low twice in the past 20 years (“03 and ’09).
Do you think this reading portends another bullish outlook for stocks as it did in ’03 and ’09.
Tony Caldaro’s weekly commentary favors this bullish outlook.
J: I don’t pay much attention to AAII simply because it’s not very valuable as a contrarian indicator. There are others that work much better.
Q: Did One Of The World’s Richest Men Just Bet $1.1 Billion On An Imminent Market Crash? Or Is There More To This Story? http://moneymorning.com/ext/articles/windfall/soros-bets-on-market-crash.php?iris=388649
J: Soros has had a sizable put option position against the S&P for several quarters now. Clearly he’s one of the few interested in protecting against the downside right now.
Q: Hi Jesse,
I’ve been a subscriber since April and am happy with your service.
When I look at your trades in Trades, the last trade I see is a GLD trade on April 29th.
I know you’re done trades since I’ve been a member but they’re not there – should they be there for us members to see ?
J: Those are all the trades for the tactical portfolio. I was also keeping a spreadsheet of the “trade ideas” trades for a while but I got lazy about it. I’ve been looking into some software for making these portfolios “realtime” which would show true position sizes and trades and everything. Stay tuned.
Q: Hi Jesse –
This is a bit of a broad question, but what do you think about TIPS? Any reason to have some in the portfolio now or soon? I notice they’re not in your ETF portfolio, but guys like El-Erian recommend having some. Thoughts?
J: Personally, I’d rather own REITs and Gold as an inflation hedge. I just think inflation is woefully understated by the government’s measures and for that reason TIPS are not the best vehicle for this purpose but many smart people would disagree.
Q: Ouch. This hurts. I looked at inverted hammers and they keep going down. What pattern do you see now or you just see if cannot keep going down?
J: The main thing to consider is this IS the puke that we were waiting for. Many were waiting for it. Most of those are too scared to buy now but will probably hop aboard as soon as they turn. Buying into panic like this usually has a very high probability of success. The last two times GLD sold off 8 days in a row it rallied more than 3% the next day. The juniors continue to bullishly diverge, too, which is very constructive. Nothing’s changed. We’re just getting better prices. This is also why I like to look at the trade ideas as a portfolio. Even though we are losing money short-term in NGD and GG we are making money in ZROZ and in our equity short positions. Every position in there I consider in the context of the whole.
Q: Hi Jesse
About 30% of my portfolio, which I invested in the broad US stock market around 2012, is up approx. 100%.
I am considering getting out because of the poor outlook, however don’t fancy the 15% capital gains tax 🙂 I don’t necessarily need this money for the next 10 years.
Any thoughts/advise ?
J: The valuation measures I use suggest the next 10 years could easily produce no return from US stocks. For me, that means I have no desire to hold that asset class via an index fund that offers all risk and no reward. I agree that cap gains tax sucks. Maybe you should consider hedging a portion if not all of your equity exposure. I suppose it all depends on your comfort level with that and your personal goals and risk tolerance.
Q: Mr Felder,
I have followed you for some time. I stole my wife away from Bend, she is still upset about leaving that part of Oregon. So I know why you live there. I have a question, what is your thoughts on the MLP sector?
Thank you so much for your time.
J: I really like KMI and have for some time. Outside of that I think the sector will probably do well going forward but I haven’t really delved into any of the other names in the space.